A former import car salesman lets you in on insiders' secrets that will save you money on the next

car you buy By James Underwood

n six yean of selling import cars. I've made a number of observations. Some will probably surprise you. Some may even make you angry. In any case. a good deal of the information I'm about to sham with you has never k e n in print befox. for reasons you'll find fairly obvious. Disclosing this information might make it difficult, if not impossible for me ever to work in the business agrun--dealer principals in general having a poor sense of humor about such things. This information will, however, open your eyes and help you become a s W r , better-informed buyer. To benin with. most ~ e o ~ leven c . veteran import &I buyers, don't h i z e that there are fundamend differences between how an mwr( dEa~eIShi~ and a domestic dealers hi^ wdrk. Or, if th& do, they haven't come tb the realization that these differences call f a changes in buying smtegy. One of the most fundamental differences is in how the two types of dealerships get their inventory. Domestic dealers, if they aren't too particular about their model mix, have far less trouble getting more cars to sell than almost any major import. To the impon dealer the s something distributor's greafest "catrd' i called the allocation. And that allocation is linked, in many cases. to what is called "the turn to e a m " 4 e more you sell. the more you get to sell. What does the allocation system of distribution mean to you? It's the end of the month. You drive into a Ford dealership and notice 400 cars in inventory with a vanspotter circling the block with more to unload. The normal assumption would be that you had found a volume or discount dealer and that you could expect him to give you a minimum pmfit deal a lot easier than a dealer with a small inventory. At a domestic dealership in most cases you would be right, but in an import dealership you've most likely fwnd the dealer who sells his cars a t higher prices than his competition. There's a saying in the impon business: "He who has, gets more." And this is how it works. If b e e import dealers in a region have a similar allocation, perhaps 50 cars a month.

At an lmpotl dulerohlp. a full lot I sm

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and even a small number of people comparison shop, who do you suppose will sell their can fmt? The dealer who gives the k t prices, of course. And because he can't get more can from the distributor due to the constraints of the allocation system. you can see how his lot might look w a y bare by the end of the month. At the same time, the dealer who holds his cars will have plenty of cars to sell. And, of course, this is the rationale. Because the hold-out dealer will have cars available fadelivery at a time when his cornpetitas don't, he'll be able to sell them for a substantial amount mare to the people who need a car right away. So, if this linle game works so well, why don't all dealers hold their cars until the end of the month? It's a simple matter of money. Most dealers don't have enough money to warehouse a large number of cars without borrowing money from the bank to do it. You've heard this term before; it's called "floor plan." Bankers love it. Dealers hate to pay it. And so each dealer strikes a balance between how many can he has on hand to sell and how much cash flow he needs week to week to keep everything functioning. Holding cars, therefore. is a game for the stmng only, another reason why it works. But don't feel sorry for the small dealer. There's a game he can play, and it's nearly as good. It's called warehousing buyers. It's a variation on the same rheme, and also

dimfly relaled to the allocation system. Each year, the manufacturers decide ahead of time bow many of what model they're going to build and in what colors. Tben the distributor decides how many each individual dealer is going to receive. It comes down to a definite number. If an individual dealer is slated to receive 600 cars over the model year. number 601 is nearly impossible for him to obtain. So it stands to reason that if a dealer t&s more deposits on cars than he has in total allocation, someone is going lo get lofl out. Who most often gets the short shaw? Those huyers with the smallest gross profits in theiu deals. Ironically. the same ones who werc otherwise the best negotiatm. Now, of cciuse, what I've done here is put you into a newin situation, haven't I? Please realize that nol all dealers play games like these with their huyers. The point I'm trying to malte is that some do, and you need to know how to protect yourself. Let's talk about the origins of your new ca~. I don't mean the country in which it was supposedly built, even though that's an inleresting story .in itself since some German cars are built in Brazil, some Swedish cars are built in Caoada, and some Japanese cars come from the U.S., of all places. What I'm talking about is this. Now that you've "ordered" your new car, how is the dealer going to till your order? You have a nghl to ask this question. In fact, as a matAUTOWEEK JULY 18. 1988

30

agttement.) he minuk you s t a r t tal~ing sboutacarinanymyothaearegory&sidcsin stock, to some extent you're rolling the d i a . Som pcoph would h e r deal in a known wmmcdity then gamble umrcauarily. You may be ooe of lbcse pecrpk.

te~ of selfdefense, it's nsessary for you to

ask this question. You see, in the Detmit scnse of the word. them is w such thing as an ordered car wbcn you are dealing with the majority of the imports. If the car you're buying isn't
rtually "in stock," then it's eithu "incoming" or it's to be "located." Nobody ever even so much as calls the factory on your behalf; it wouldn't accomplish a thing. La's look closely, then. at some of the pros and cons of each of thcsc the categories. In Stock. ' l l ~ r e arc a number of advantages to buying a car that's immediately availabk, very few of whkh are nlsted to price. In fact as we've already discussed, you're apt to pay mae f a a c a r that's in
AUTOWEU( n L Y 18, 1988

(with lbe exaption of heavy shipmnt petiods early in the model nm when many
st&

dealers have large inventories on hand). Thc advantages have to & with knowing that you have a finalized deal. Knowing that your price will not change overnight hecause of sudden p r i a changes (a valid coneem given tlucluations in exchange rates as well as " d prioc ' h*cs). K n o W wbcn you can take delivery. Knowing that your Jalespemou isn't going to call you in a few weeks and tell you that your c a r arrived with more equipment than you expected, a that you are now subjat to a mmufactuer's price increase. (Thm is no such thing as p r i a pteCtion on an ordered car, and if you doubt this, Md tbe back of y m snlcs

lmwnlng.Thisisacartha(mthetimcof pmchsseisMuaUysbowiDgmthedalds next monthly alloclton. In most case8 ar whose scrial number is available to you upon signing your purchpse contrst. TypicaUy an import sakspmon w& heavily from this ineomiag a l l d o n . When business is strong, it isn't umnnmon to have most of this g m q sold h e f m t k y ever arrive at the dealemhip. You'll most likely maLcyourbestdulononeofmesc,but remember you are hying somclhing sight unseen and there's always a ar(ain amount of risk involved. M do gel dnmaged in shipping, and in some rare cases thcy actually do disappear from a l M w . The pria could slso change. LaateorDakTn&Thisisaco that the dealer sells you litaplly m mC "if come." It isn't in stock. It isn't in his next allocation. He may have a l d y sold out his allocation of this r n u l a r model. He taLes ywr deposit in hopes that he can come up with the car. Locate cars cause the most problems for buyers and for dealers alike. This doesn't mean, however, that you should drain From buying a car this way. If you do, there is a fairly simple safeguard
31

you should employ, namly a time limit on plans to obtain tk car you've ordered, you ance on your wade as well. Theso calls your &. If the dealcr hasn't found it in gain a rraligtic pichm of what you can ex- mn't any fun to make or meive, believe k of avoiding me, but a bunch of them are made at the cod two weeks, then chances are k W t going pect. Yw have a better c wt of tim of d m o d c l yuu. t o , o o d y w c a n p s s u m y w ' v e ~ ~the warehousig pa&: ~ n n i n g You can a h ex* that your best aegobowed. Thc trick here is to be tk buym whilc waiting for an imaginary car to wm they're afraid they're going to lorc. A time in and then being formd to buy one from a tiated price will be slightly different delimit f o r m pedonnawe and dtCICBDes your hold-out dealer at a premium pdce, or get- pcndingontkspecificoriginsofthewin ting a d risk of s i pria inauses. ~ ~ lfrom your dealer telling you your question. A far in stock is a known wms o c b c n m c s e a r c t h e v a r i w s o I i ~ 0 f onla bas been moved fo~wardto the next modity for the dealer as well. He b o w s it's new cars at tk level that a f f m you--tbe model year. Mcaniog armc back in aod we UICIC and in good condition. and that if you ; delivery level. By knowing how your dealer will megotiate your price and the allow- don't buy it, gomwne will after you leave. An incaning car c a t s me dcaler abwlutely Ilochinginflmrplanifkcandelivaittk moment it arrives, meaning hc can make the
slmmncyorncadysooodgiveyoua

Negotiation tactics t h t will work at any dealersh

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bm is a specific way you oecd go abouc comparison shopping in orda to get accuratc-and u n i i i b l e infomiation. and in & to maintain contml. CenPin I b g s to say to get away from your spkspasoo w k n you're ready. Ways to put a valuc on tk various "packages" that arc offered from dealer to duler. Let me give you nine important idcap: 1) Neva talk pricc on the fmt visit to the dealership. Tell tkm that you're going to shop cars fmt and $en price, once vou've been sold on the om~uct.~e firm

the dealership at a later 5) Make sure

w e their full energies on you. 7) Never lie to a

wmt,rc+k&yo"ronginsl~ k or she hap alrrady made an invtsmrnt m you. State clearly that you an going tocanprismsbop.Remmba..Thcmxc l k y ~ ~ ~ m o l p s r
tklesscompecitivetheyknowlkym. 3) Whm yau've got enough price data
to indicate to you what thc market is on

your car, make your offer slightly lower and t b l e ( t k m "workm you up to tk lower cnd of the muLet mge. SalcJpoop k and sales managers .rc compulsive winms-4~ t k m win. but on vour terms.

eommunily, awl a away the fax you haven' vnifation dasn't pay. 8) h ' t deal with " L.%thcmappraiseyour&. Be to eliminate the c h a m s of a "low ball. 9) Always do exactly what you do. This i you'll s m ~ ~will make it much as' canc and go witbolu a lot of himion' 'Ibcy'U also believe you wben you your fd offer. 'Ibis is by no maos a wmple howtobuyyournextimpoRcar or lowest pmsibk price. I've kfi out deal of veq useful information, a n w of the nuts and lmlts. But hoafi~llv

mm attractive price. Thc locate car is tk joker in tk deck for all concanod. It can pay off for the dealer, and it can work for the buyer as wcll, if hc or she is smaa enough to use a tim limit. Now la's move from the fundamntol to the speffic. How do you go about getting mOtaStpriceinthcfustplace,andhowdo you know for surc when you've got it? F m of all you need to thmw out all of yourprieegUidesand~thatrelW to tk dealer's markup on the car of your choice. Thc dealer isn't p i n g to allow you to dinate to him what his pmfit should be. He's not going to change the way he das things, just because you hnppcn t o Lrww to the d o h how much pmfit he's going to makc on your sale. H d words but factual. And don't be angry at tk dcalm for his attitude. He's only a businessmsn who's aware of tk market his pfcduct enjoys. Thc marlet his product enjoys ...thinL fbout that idea for a moment. .hpm cam nn subject to a marlet. More accurately a markelrange.Wbaryoucandoismakesurc you buy your ear for a price in the l o w portion of that market range. What you can't do is buy a car below its m a h t pria. The gimmicks won't w o k These dealers only get so many cars to sell. When they sell onc for the wrong price, it huM tkm d l year long. This lwvw you with the c h a l h g c of fiadiog out what that marLu is, and the only way you'll do that is to wmpnrison shop (see sidebar). Remember this final thought: Thcrc is no substilute for having t k right infolmoth.
IfyoulsLcthetiwtokamwhutkMllrct price is for the car of your choice, tbm is

no sales gimmick or super close that can maLe you pay more. It's really just as simple as that.

J m s U n d c n m S s book. Th lmprm Cn Buya's Suwival Guide (E.P. Durton, paper. bock, $10.95). is & in Avgvn Md m m
~ a d j r m , k ~ ~ h l i mYpmdmnu,larrindmdphlpoyrw*r.

UMolrowrircsms,m-

b d on hdr-misi.7~sidmmufmn hi, ~ o r s arrmbnpwfcorsoL~.